European shares rise to near multi-year highs

Reuters LONDON | Updated on January 23, 2018 Published on May 19, 2015

European shares rose back to near multi-year highs on Tuesday after a European Central Bank (ECB) policymaker said the ECB would front-load an asset purchase scheme, aimed at boosting growth in the region.

The comments led the euro to trade below $1.12 for the first time in a week, juicing investor appetite for stocks - especially in the exporter-heavy German DAX index. Euro weakness in the first three months of the year added 17 billion euros to German blue-chip company revenues, according to EY.

Athens' stock market, which has consistently underperformed this year due to worries over Greece's debt situation, also rose after the Greek labour minister said Athens would soon conclude a deal with foreign creditors that could unlock more loans to the cash-starved country.

The pan-European FTSEurofirst 300 index was up 1.3 per cent at 0927 GMT, though it pulled back from session highs after a survey showed German investor morale fell by more than expected in May.

The FTSEurofirst has now recovered its losses since the start of the month, with some investors saying the past few weeks' volatility linked to the roller coaster sell-off in the bond market had not altered their positive stance on equities.

"I still think that bonds are risky and that equities remain the asset of choice," said Francois Savary, chief strategist at Swiss bank Reyl.

Some fund managers warned however that European equities were by no means cheap and that it was time to trim exposure to blue-chip, dividend-paying quality companies in the current environment.

"I have tactically cut back on financials because of the growing risk around Greece and have increased my exposure to real estate," said Michele Patri, portfolio manager at AllianceBernstein.

"I am not any more in ultra-high-quality names. I don't think the market valuation is cheap."

Among big movers, media group Reed Elsevier rose by 3 per cent after Goldman Sachs raised its rating on the stock to "buy" from "neutral".

However, Vodafone fell 2.6 per cent as some traders said the mobile network operator's guidance had been slightly below forecasts, even though Vodafone returned to quarterly sales growth.

According to data from Thomson Reuters StarMine, 61 percent of the companies on the pan-European STOXX 600 index have beaten or met market expectations with their first quarter results, while 39 percent have missed expectations.

Published on May 19, 2015
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